IN THE UNITED STATES DISTRICT COURT

FOR THE SOUTHERN DISTRICT OF OHIO

EASTERN DIVISION

Safety Today, Inc., :

Plaintiff, : Case No. 2:12-cv-510

 v. : JUDGE MICHAEL H. WATSON

Susan Roy, et al., : Magistrate Judge Kemp

Defendants. : 

 OPINION AND ORDER

The nature and history of this case has been set forth at

length in other orders of the Court and need not be repeated

here. The case is currently before the Court to consider Safety

Today’s motion for sanctions against Defendant Safeware, Inc.

(Doc. 140). Safety Today asks for monetary sanctions based on

what it claims to have been Safeware’s disobedience of certain

written and oral orders issued by the undersigned Magistrate

Judge which, Safety Today asserts, made its imaging of certain

electronic devices (computers and cell phones) more expensive

than necessary. For the following reasons, the motion for

sanctions will be denied.

I.

The pertinent background to Safety Today’s motion begins

with the Court’s Opinion and Order of March 27, 2013. Safety

Today claimed, in its complaint, that defendants Susan Roy and

Joanne Brady took confidential information with them when they

left Safety Today’s employ, and that they shared it with their

new employer, Safeware. Because much if not all of that

information was electronically stored, Safety Today asked, in

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discovery, for access to any devices which might show what

information the defendants actually expropriated.

When the parties could not reach agreement on the scope of

such discovery, Safety Today moved to compel. Safeware’s

opposition was based on a lack of foundation for the request, its

alleged burdensome or oppressive nature, and the fact that all

such information had already been sequestered and preserved for

Safety Today’s review. The Court granted the motion to compel

but, in order to address Safeware’s concern about the

confidential nature of some of the information which would be

found on its devices, directed that the results of any such

discovery be produced on an “attorneys’ eyes only” basis. See

Doc. 104.

Safeware expressed concern about the production of its

electronic devices for imaging purposes, and was not satisfied

that the restriction placed on that discovery was sufficient to

safeguard its interests, given that it and Safety Today were

competitors. As it had a legal right to do, Safeware moved to

stay that order and also filed a motion for reconsideration with

the District Judge. In the meantime, the parties engaged in

discussions about how to implement the order if it were not

stayed. They commendably brought several disputes about that

process to the Court for possible informal resolution, and the

Court held two informal discovery conferences in April and May,

2013, each time urging the parties to find a cooperative way to

resolve their differences. Ultimately, the Court held a motions

hearing on May 7, 2013, at which it made rulings designed to

break those impasses which still separated the parties. A

transcript of that hearing can be viewed at Doc. 136.

The transcript presents a fair review of what the issues

were at that time. One issue was whether, if certain procedures

could be implemented, Defendants would withdraw their motion to

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reconsider and to stay the initial discovery order - something

which had been a topic of discussion at the prior conferences as

well, and a motion which the Court still had under advisement at

that time. Defendants had offered several suggestions for the

document production, which were (1) Defendants’ counsel would

maintain the complete images of the devices after Plaintiff’s

expert created them; (2) any documents ultimately produced would

not be shared initially with Kimberly Duttlinger, who was counsel

for Plaintiff, based on her dual role as counsel and business

advisor, but further discussions could be had about sharing

specific information with her after it was reviewed by litigation

counsel; (3) Defendants’ counsel would be able to review all of

the documents produced by the imaging process and subsequent

search process for privilege, relevance, and confidentiality

before those documents were produced to counsel for Plaintiff,

but would, upon request, provide copies of any withheld documents

to Plaintiff’s counsel for an in camera review, and would create

logs showing what documents were being withheld; and (4)

Defendants could not withhold any document which was either a

Safety Today document or referred to a Safety Today document.

To counter that proposal, Safety Today made an oral motion

for an order which would include “a date certain by which

Safeware would grant Safety Today access to these computers for

purposes of imaging them.” (Tr. 17). Safety Today suggested

that two weeks “would be about the right time frame for that

deadline to come up.” Id. It also asked for a time frame for

privilege objections to be made (one month), and suggested that

if these time frames were not met, Safeware would be precluded

from opposing certain of Safety Today’s claims on the merits or

proceeding on its counterclaim. Finally, it requested a default

judgment and expenses, again predicated on Safeware’s failure to

comply with deadlines established by the Court.

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After that motion was argued, the Court explored the extent

to which the parties had different positions on the protocol to

be followed for producing the documents stored on the computers

and other electronic devices which were subject to the Court’s

discovery order. The first three steps in their competing

proposals were identical: that the vendor (Vestige) selected by

Safety Today would make the images on-site, that it would run the

search terms through the imaged databases at its place of

business, and that it would deliver the results of that search,

in CD form, to Safeware’s counsel. Counsel also agreed that,

consistent with prior court orders, Safeware’s counsel would

conduct a privilege review and would be entitled to withhold any

documents based on a claim of privilege. However, Safeware also

asked for the right to withhold documents (with the exception of

documents coming from Safety Today or referring to those

documents) on grounds of relevance, whereas Safety Today wanted

all non-privileged documents produced subject to an attorneys’-

eyes-only restriction. Safeware acknowledged, however, that if

it did withhold any documents on the basis of relevance, and

Safety Today, after reviewing the logs describing those

documents, asked to have them produced for counsel’s review, it

would be obligated to do so.

The issue of review of documents by Kim Duttlinger then

resurfaced. The Court, after hearing argument, concluded that it

was the better practice to postpone any ruling about her status

until some concrete issue about her need to see (or not to see)

certain documents actually surfaced. The Court then modified its

prior order to incorporate, more or less, the protocol offered by

Safeware’s counsel. No particular time frame was established for

document production, although the Court referred to a month “as

an outside parameter” and expressed a hope that the parties could

“beat [the] proposed schedule by maybe two full weeks.” (Tr. 53-

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54). The actual order, coming at the conclusion of the

conference, was (in terms not especially precise) “Let’s do it. 

Get Vestige going. Get the images made. Get the review done. 

Get everything in place. And then we’ll probably be a month down

the road, and we’ll see where we are.” (Tr. 58).

 II.

A substantial portion of the motion for sanctions deals with

what took place after the May 7th conference. According to

Safety Today, this is what happened.

First, Safeware offered to make all but one of the devices

in question (which turned out to be seven hard drives, three

servers, and three smart phones) available for imaging on any

date between May 13th and May 17th. The one not available that

week was Ms. Roy’s smart phone. Safety Today arranged to have

Vestige do the imaging at Safeware’s Maryland location on the

16th. The day prior to that, Safeware let Safety Today know that

another one of the smart phones would not be available any time

that week. On the day of the inspection, two more devices - both

laptops - were not ready to be imaged. Images were made of Ms.

Roy’s phone and laptop on May 23rd, but Mr. Arthur’s were not

produced until eight days later, apparently due to his travel

schedule. The piecemeal production of these devices for imaging

underlies one of Safety Today’s three requests for monetary

sanctions: an order for “expert fees and related costs incurred

by Safety Today in having the Devices imaged on multiple dates

and at multiple locations.” Motion for Sanctions, Doc. 140, at

14. 

The other two requests for monetary sanctions relate to

events which both preceded and post-dated the May 7, 2013 order. 

Safety Today has asked for attorneys’ fees and costs associated

with all of its communications with Safeware’s counsel between

March 27, 2013, the date of the initial discovery order, and May

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31, 2013, the date of the final imaging, and it has also asked

for attorneys’ fees and costs incurred in connection with the two

informal telephone discovery conferences and the May 7th motions

hearing. Before discussing whether any of these requests stand

on sound legal footing, the Court will briefly summarize

Safeware’s factual response.

Safeware notes that the imaging was never scheduled to be

accomplished in just one setting. Ms. Roy’s phone was not

offered to be available in Maryland, and Mr. Arthur’s travel

schedule prevented his phone and laptop from being available on

that date at that location. Those latter devices were available

for a few hours on May 23rd, but Safety Today declined to perform

the imaging that day because it felt more time was needed. Mr.

Arthur was finally tracked down on the 31st and the images were

made then. Safeware points out that some re-imaging had to occur

in June, and notes that none of the glitches with imaging devices

in May had any impact on the discovery schedule. The Court

notes, independently, that although Safety Today asserts in its

brief that the piecemeal production of devices for imaging caused

it additional vendor expense, it has not submitted any proof

(like an affidavit or declaration) to that effect nor any

estimate of those expenses.

III.

 Fed. R. Civ. P. 37(b)(2) provides, in pertinent part,

that:

 If a party or a party's officer, director, or

managing agent--or a witness designated under Rule

30(b)(6) or 31(a)(4)--fails to obey an order to provide

or permit discovery, including an order under Rule

26(f), 35, or 37(a), the court where the action is

pending may issue further just orders. They may include

the following:

(I) directing that the matters embraced in the order or

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other designated facts be taken as established for

purposes of the action, as the prevailing party claims;

(ii) prohibiting the disobedient party from supporting

or opposing designated claims or defenses, or from

introducing designated matters in evidence;

(iii) striking pleadings in whole or in part;

(iv) staying further proceedings until the order is

obeyed;

(v) dismissing the action or proceeding in whole or in

part;

(vi) rendering a default judgment against the

disobedient party; or

(vii) treating as contempt of court the failure to obey

any order except an order to submit to a physical or

mental examination.

(B) For Not Producing a Person for Examination. If a

party fails to comply with an order under Rule 35(a)

requiring it to produce another person for examination,

the court may issue any of the orders listed in Rule

37(b)(2)(A)(i)-(vi), unless the disobedient party shows

that it cannot produce the other person.

(C) Payment of Expenses. Instead of or in addition to

the orders above, the court must order the disobedient

party, the attorney advising that party, or both to pay

the reasonable expenses, including attorney's fees,

caused by the failure, unless the failure was

substantially justified or other circumstances make an

award of expenses unjust. 

 Although the Court has authority under Rule 37 to impose

various sanctions, and a certain amount of discretion to

choose the sanction most appropriate, there are limits on

that authority. For example, the power to order a dismissal

or the entry of a default judgment, because such order

deprives a party of a claim or defense without a hearing, is

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not unlimited. "[T]here are constitutional limitations upon

the power of the Courts, even in aid of their own valid

processes, to dismiss an action without affording a party the

opportunity for a hearing on the merits of his cause."

Societe Internationale v. Rogers, 357 U.S. 197, 209 (1958).

Consequently, if a party's failure to provide discovery or to

comply with a court order is "due to an inability fostered

neither by its own conduct nor by circumstances within its

control," and therefore not due to "willfulness, bad faith,

or any fault" on the part of that party, dismissal as a

discovery sanction is inappropriate. Id. at 211, 212. On

the other hand, where a party demonstrates bad faith by

failing to meet dates set by the Court for compliance with

discovery, despite being warned about possible sanctions, the

Court does not abuse its discretion in finding that such

"callous disregard" of discovery orders justifies dismissal.

National Hockey League v .Metropolitan Hockey Club, Inc., 427

U.S. 639 (1976)(per curiam).

 In this circuit, an order imposing dismissal may be

entered only if the Court makes an explicit finding that a

party bears responsibility for failure to make discovery, and

a written consideration of the various factors involved in

entering such an order.

 "Dismissal of an action for failure to

 cooperate in discovery is a sanction of

 last resort that may be imposed only if

 the court concludes that a party's

 failure to cooperate in discovery is

 due to willfulness, bad faith or fault....[A]

 dismissal of a complaint with prejudice as a

 sanction for failure to cooperate in discovery

 must be 'accompanied by some articulation on

 the record of the Court's resolution of the

 factual, legal and discretionary issues

 presented.'" Patton v. Aerojet Ordnance Co.,

 765 F.2d 604, 607 (6th Cir. 1985), quoting

 Quality Prefabrication, Inc. v. Daniel J.

 Keating Co., 675 F.2d 77, 81 (3rd Cir. 1982).

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 In considering whether dismissal or default is an

appropriate sanction, the following factors are important.

First, the Court must assess the extent of the non-complying

party's culpability and take into account any reasons that

might justify the failure to make discovery. The Court must

also consider the harm caused by non-compliance with

discovery orders, including the harm which would result if

open defiance of court orders were to go unpunished. The

Court must also balance the severity of the sanction against

the nature of the misconduct that has occurred, and determine

whether it is the non-complying party, or that party's

counsel, who is at fault in failing to comply with the

discovery order or orders in question. Pauley v. United

Operating Co., 606 F. Supp. 520 (E.D. Mich. 1985).

 Open and unequivocal defiance of a court order, however,

is not the sole basis for a finding of bad faith or willful

misconduct. The failure to respond to a court order, without

justification, after being fully informed of the obligation

to respond and the penalties for non-compliance can be deemed

to be willful misconduct. Brookdale Mill, Inc. v. Rowley,

218 F.2d 728 (6th Cir. 1954); see also Hashemi v. Campaigner

Publications, Inc., 737 F.2d 1538 (11th Cir. 1984). Indeed,

a prior warning that failure to cooperate in discovery may

lead to dismissal is a factor to be considered in determining

whether the court properly exercises its discretion in

imposing discovery sanctions. Taylor v. Medtronics, Inc.,

861 F.2d 980 (6th Cir. 1988). Taylor also cautions, however,

that the court should consider sanctions less drastic than

dismissal and, in some cases, may be required to impose such

sanctions before dismissal as a discovery sanction is

appropriate. See also Regional Refuse Systems v. Inland

Reclamation Co., 842 F.2d 150 (6th Cir. 1988).

The first requirement for imposing sanctions under this rule

is that a party have disobeyed a court order compelling

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discovery. Safety Today has identified two orders which it

claims Safeware to have violated: the order of March 27, 2013,

and the order of May 7, 2013. Safeware argues that it violated

neither. The Court agrees.

The first of these two orders directed Safeware to make its

electronic storage media available for imaging, and to produce

the nonprivileged documents on those media. It did not do so

immediately after the order was entered, but it acted

appropriately by seeking a stay and asking the District Judge to

reconsider the order. The motion for stay, and alternatives to

granting a stay, were the subject of considerable discussion both

between the parties and with the Court over the course of several

weeks following the filing of that motion. Rather than either

enforce the order according to its precise terms or stay the

order pending reconsideration by the District Judge - either of

which would have pushed the parties to the next step of the

process - the Court first attempted to obtain an agreement which

would both permit compliance with the order and resolve the

issues which Safeware raised in the motion to stay. When that

course of action failed, the Court held a motions hearing and

modified its own order - an action implicitly requested by

Safeware, and something the Court always retains the capacity to

do. See, e.g., Mallory v. Lynch, 922 F.2d 1273, 1282 (6th Cir.

1991)(“District courts have inherent power to reconsider

interlocutory orders and reopen any part of a case before entry

of a final judgment”). Given the modification of the order, the

question raised in this case is not whether Safeware complied

with the March 27, 2013 order, standing alone, but whether it

complied with the March 27, 2013 order as modified. Thus, to the

extent that Safety Today’s motion rests on the premise that

Safeware violated the earlier order by not producing the devices

for imaging prior to the May 7, 2013 motions hearing, that

premise is faulty. The final word on how and when those devices

were to be produced came in the modification.

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Even if that were not the case - and there may be some

situations (although not this one) where a party can successfully

obtain a modification of an earlier order yet still have failed

to comply with that order in a way that invites sanctions - the

Court would not ordinarily sanction a party who has sought both a

stay of an order and, in good faith, a modification of that order

before complying with it. The record contains no indication that

the modifications Safeware asked for were requested in bad faith

and, in fact, the Court substantially adopted them when it

modified the order. Further, it was this Court’s efforts to

obtain an agreement from the parties to go forward with discovery

notwithstanding the pending motions for stay and reconsideration,

and its choice not to make an immediate ruling on the motion to

stay which effectively prevented Safeware from pursing its stay

motion before the District Judge. It would be perverse indeed to

penalize Safeware under circumstances where it had a right to

obtain a judicial ruling on its stay request but did not get one

because the Court was working with the parties to obviate the

need for such a stay. Overall, absent a finding of either

disobedience to the Court’s order, or a lack of good faith in

attempting to have that order stayed, rescinded, or modified,

there is simply no basis for awarding sanctions for any of

Safeware’s conduct between March 27, 2013 and May 7, 2013.

The remaining question is whether Safeware complied with the

May 7 order. As noted above, the key elements of that order were

to undertake, expeditiously, the imaging of the storage media, to

get the privilege review accomplished, and to get the documents

produced. The Court expressed some optimism about the time

needed to do that, but did not impose any strict time limits. It

appears from the parties’ filings, including the reply

memorandum, that the imaging process did not go as smoothly as

was hoped - both the delays in getting access to Mr. Arthur’s

devices and an unexpected software problem encountered by Vestige

contributed to that delay - but by August 21, 2013, Vestige had

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completed its review and provided documents to Safeware’s

counsel. The Court has heard nothing further which would suggest

that there were any other delays in getting the documents

produced. It is simply not possible, on this record, to conclude

that Safeware’s conduct after the May 7 conference, which

culminated in the imaging of all of the devices within 24 days,

violated the express terms of the Court’s order.

As noted, however, the process did not go without its

hiccups, and, perhaps as a matter separate from alleged

disobedience to a court order, Safety Today has suggested that

the delay and circumstances surrounding the production of Mr.

Arthur’s laptop and smart phone call for sanctions. It is not

clear what the basis of such an award would be; perhaps Safety

Today claims that Safeware violated an agreement reached between

the parties as to the production of the devices, or acted in bad

faith in unnecessarily complicating the imaging process. Apart

from the fact that there is currently no evidence of record that

Vestige actually incurred additional expenses by having to image

Mr. Arthur’s devices separately - which would require some

comparison between how much time it would have devoted to that

effort had they been produced with the other devices versus the

time (including travel) and expense incurred in imaging them on a

separate date at a separate location - there is also no evidence

that Safeware acted in bad faith or intentionally attempted to

make the process more difficult. It may be the case that had it

“pressured” Mr. Arthur sufficiently, it could have gotten his

devices earlier, but it did inform Safety Today in advance of the

May 16 production that Mr. Arthur’s phone would not be there due

to his travel schedule. Whether or not his computer had been

made available then (and it appears that Safety Today was led to

believe it would be, and was surprised at its absence), it would

still have been the case that a separate imaging session had to

be scheduled for his smart phone. In other words, if the email

string attached to Safety Today’s motion does represent a written

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agreement between the parties as to the imaging process, the only

apparent breach was the failure to have Mr. Arthur’s laptop in

Maryland on May 16, and the consequences of that failure appear

to have been minimal given the need to perform a separate imaging

on his cell phone. Safety Today did have to pursue his devices

with some additional vigor, but that alone is neither enough to

demonstrate bad faith on Safeware’s part or to justify awarding

sanctions.

IV.

This case has not been the easiest one to manage from the

Court’s perspective. It has generated more than the usual amount

of motions practice concerning discovery. The Court has made

rulings both for and against each party, and both parties have,

at various times, moved for reconsideration and a stay of those

orders. That having been said, the Court finds nothing

sanctionable in the proceedings following its grant of Safety

Today’s motion to compel, nor any disobedience of the order of

March 27, 2013, as modified on May 7, 2013. This is not to say

that, in other circumstances, a party’s noncompliance with a

discovery order absent a stay of that order would be justified or

would escape sanctions, but under the circumstances of this

particular case, sanctions are just not appropriate. The motion

for sanctions (Doc. 140) is therefore denied. The Court also

denies as moot the motion (Doc. 145) to amend and correct the

case schedule, and directs the parties to submit a joint proposed

scheduling order within fourteen days.

V.

Any party may, within fourteen days after this Order is

filed, file and serve on the opposing party a motion for

reconsideration by a District Judge. 28 U.S.C. §636(b)(1)(A),

Rule 72(a), Fed. R. Civ. P.; Eastern Division Order No. 91-3, pt.

I., F., 5. The motion must specifically designate the order or

part in question and the basis for any objection. Responses to

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objections are due fourteen days after objections are filed and

replies by the objecting party are due seven days thereafter. 

The District Judge, upon consideration of the motion, shall set

aside any part of this Order found to be clearly erroneous or

contrary to law.

This order is in full force and effect, notwithstanding the

filing of any objections, unless stayed by the Magistrate Judge

or District Judge. S.D. Ohio L.R. 72.3.

/s/ Terence P. Kemp 

United States Magistrate Judge

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